US Stocks Rebound As Powell Signals Fed Will Proceed 'Carefully' On Interest Rates: What's Driving Markets Thursday?

Thursday saw the U.S. stock market displaying mixed performance as 10-year Treasury yields approached the 5% threshold, only to recover in response to Federal Reserve Chair Jerome Powell‘s opening remarks prior to his Economic Club of New York address, prompting traders to scale back their expectations for interest rate increases.

The FOMC is now proceeding carefully, acknowledging that substantial tightening in financial conditions can result from an increase in bond yields, subsequently affecting policy decisions, Powell said. A period of above-trend growth may still imply “meaningful tightening” of interest rates, he said.

In response to Powell’s comments being interpreted as dovish, traders scaled back their expectations for interest rate hikes. Presently, the market is pricing in a 96% probability that interest rates will remain unchanged in November.

Investors also reacted to mixed earnings from major U.S. corporations. Tesla, Inc. experienced a significant decline of more than 9%, marking its worst session since early January 2023, in response to disappointing earnings. On the other hand, Netflix Inc. NFLX saw a 16% increase in its stock price, fueled by better-than-expected results and a substantial surge in subscribers. This performance marked the largest one-day increase for Netflix since January 2021.

Cues From Thursday’s Trading: 

The S&P 500 index saw a 0.2% rise. A similar performance was achieved by both the Dow Jones Industrial Average, representing blue-chip stocks, and the tech-heavy Nasdaq 100.

The Russell 2000 index, which includes smaller-cap stocks, declined by 0.1%.

US Index Performance On Thursday

Thursday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was flat at $430.20.
• The Invesco S&P 500 Equal Weight ETF RSP fell 0.2% to $140.18.
• The SPDR Dow Jones Industrial Average ETF DIA held flat at $336.81.
• The Invesco QQQ Trust QQQ rose 0.2% to $364, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Communication Services Select Sector SPDR Fund XLC rose the most, up 1.1%, aided by the 4.3% increase in Meta Platforms Inc. META.
• The Consumer Discretionary Select Sector SPDR Fund XLY fell 1.5%, in reaction to Tesla’s earnings.

Upcoming Economic Data:

Weekly unemployment benefits dropped by 13,000 compared to the previous week, reaching a total of 198,000, the lowest since January 2023.

Among other Fed speakers making public appearances are:

• Chicago Fed President Austan Goolsbee at 1:20 p.m. EDT.
• Fed Vice Chair for Supervision Michael Barr at 1:30 p.m. EDT.
• Philadelphia Fed President Patrick Harker at 5:30 p.m. EDT.

See also: Best Futures Trading Software

Stocks In Focus:

• AT&T Inc. T rose 7% amid better-than-expected quarterly results.
• Other companies reacting to their quarterly earnings include: Alaska Air Group, Inc. ALK, down 1.6%, Blackstone Inc. BX, down nearly 6%, KeyCorp. KEY, up 3%, East West Bancorp, Inc. EWBC, up 4.3%, Fifth Third Bancorp FITB, up 2.2%, Nokia Oyj NOK, down 5.6%, Union Pacific Corporation UNP, up 3.3% and Philip Morris International Inc. PM, down 2%.
• Those reporting after the close include CSX Corp. CSX, Western Alliance Bancorporation WAL, Knight-Swift Transportation Holdings Inc. KNX and Intuitive Surgical, Inc. ISRG.

Commodities, Bonds, Other Global Equity Markets:

Crude oil rose 0.7%, with a barrel of WTI-grade crude trading at $87.65. The United States Oil Fund ETF USO was 0.7% higher to $80.41.  

Treasury yields were mostly flat, with the 10-year yield at 4.92% and the 30-year yield at 5.02%. The iShares 20+ Year Treasury Bond ETF TLT was 0.6% lower for the day. 

The dollar fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.5%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.5% higher to 1.0604.

European equity indices had a negative session. The SPDR DJ Euro STOXX 50 ETF  FEZ fell 0.8%. 

Gold rose 0.7% to $1,960/oz, while silver was flat at $22.83. Bitcoin BTC/USD was 1.8% higher to $28,830.

Staff writer Piero Cingari updated this report midday Thursday. 

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